Accumulation Distribution tracks the relationship between price and volume and acts as a leading indicator of price movements. The indicator is based on the premise that the more volume that accompanies a price move, the more significant the price move. It provides a measure of the commitment of bulls and bears to the market and is used to detect divergences between volume and price action - signs that a trend is weakening.
Accumulation Distribution is an enhancement of the On Balance Volume indicator. It first compares opening and closing prices to the trading range for the period, the result is then used to weight the volume traded.
The strongest signals on the Accumulation Distribution are divergences:
Go long when there is a bullish divergence.
Go short when there is a bearish divergence.
Stop-losses should be placed below the most recent low (when going long) and above the latest high (when going short).
When the Accumulation/Distribution moves up, it shows that the security is being accumulated as most of the volume is associated with upward price movement. When the indicator moves down, it shows that the security is being distributed as most of the volume is associated with downward price movement.
Divergences between the Accumulation/Distribution and the security's price imply a change is imminent. When a divergence does occur, prices usually change to confirm theAccumulation/Distribution. For example, if the indicator is moving up and the security's price is going down, prices will probably reverse.
To view this on a chart go to:
http://www.prophetfinance.com/charts/pc.asp?stay=true
Plug in your symbol
Hit Go next to the symbol
Right under where you typed in the symbol, click on + sign next to Technical Analysis
Then choose Acc/Distrib
Once the chart shows up, you can move your pointer back and forth over the graph and watch the numbers change and if you want to zoom in, just hold your mouse button down as you move across the chart, once you let up, the area you highlighted will be shown, pretty neat!
Accumulation Distribution is an enhancement of the On Balance Volume indicator. It first compares opening and closing prices to the trading range for the period, the result is then used to weight the volume traded.
The strongest signals on the Accumulation Distribution are divergences:
Go long when there is a bullish divergence.
Go short when there is a bearish divergence.
Stop-losses should be placed below the most recent low (when going long) and above the latest high (when going short).
When the Accumulation/Distribution moves up, it shows that the security is being accumulated as most of the volume is associated with upward price movement. When the indicator moves down, it shows that the security is being distributed as most of the volume is associated with downward price movement.
Divergences between the Accumulation/Distribution and the security's price imply a change is imminent. When a divergence does occur, prices usually change to confirm theAccumulation/Distribution. For example, if the indicator is moving up and the security's price is going down, prices will probably reverse.
To view this on a chart go to:
http://www.prophetfinance.com/charts/pc.asp?stay=true
Plug in your symbol
Hit Go next to the symbol
Right under where you typed in the symbol, click on + sign next to Technical Analysis
Then choose Acc/Distrib
Once the chart shows up, you can move your pointer back and forth over the graph and watch the numbers change and if you want to zoom in, just hold your mouse button down as you move across the chart, once you let up, the area you highlighted will be shown, pretty neat!
